What is a margin call?

A margin is the portion of the Cash Equity in your account required for maintaining open positions. You must have a sufficient margin of Cash Equity in your account to trade freely. 

 

On rare occasions, market conditions could cause your Cash Equity to become negative. In these cases, eToro will perform a margin call. This means that eToro will close all open trades and suspend trading in your account. You will be able to trade again only once all trades are closed and the Cash Equity is no longer negative.

 

For example: if your Cash Equity is -$50 and the current value of your open positions reaches $50 or less (including unrealised profit), eToro will close all open positions to prevent your account from reaching a negative Cash Equity.

 

To read more about margin requirements, please refer to our Terms and Conditions.

 

What is Cash Equity?

Your Cash Equity is the total worth of your real funds, including invested and non-invested funds + unrealised P/L. You can check your Cash Equity status at any time in the eToro platform by clicking the ‘Withdraw Funds’ tab in the left-hand sidebar and then ‘Show Breakdown’.

 

What happens if you reach a margin call?

If you are approaching a margin call (reaching an equity balance of 20%), you will receive a margin call alert via a notification within the platform. You can then decide whether to avoid a margin call by closing positions yourself or depositing more funds. If you reach a margin call, we will close all of your open trades and suspend trading in your account. Once all the trades are closed, we will review your Cash Equity. If it is still negative and your account is eligible, we will absorb the loss and reset your Equity to zero as part of our policy of Negative Balance Protection. You will be able to trade again once the Cash Equity is no longer negative.

 

Can you reach a margin call when you have a positive Total Equity?

Yes. A margin call occurs when you do not have enough Cash Equity in your account. The figure at the bottom right of your Watchlist and Portfolio is your account’s Total Equity, and includes any eToro credits you may have received. If your Total Equity includes eToro credits, it is possible to reach a margin call despite seeing a positive Total Equity figure, since the margin is calculated using only your real Cash Equity. 

 

How can you avoid a margin call?

To avoid a margin call, make sure you have sufficient Cash Equity in your account. Check your Cash Equity status periodically and make sure to pay attention if you receive a margin call alert from eToro. If you have any other questions regarding margin calls, feel free to contact the eToro Customer Service team.